Profits climb at Bank of China
By Xu Dashan (China Daily)
Updated: 2005-06-01 08:51

Bank of China, the country's largest foreign exchange lender, yesterday announced a 21.3 per cent rise in operating profit last year.

Spokeswoman Zhou Ning said the bank's operating profit,audited by the international accounting firm PricewaterhouseCoopers, stood at 57.8 billion yuan (US$7.0 billion) for 2004. Net profit was similar to that of 2003, standing at 20.9 billion yuan (US$2.5 billion), she said.

By the end of last year, the bank's non-performing loans reached 5.12 per cent, while its capital adequacy ratio stood at 10.04 per cent.

"We have basically finished writing off the bad assets accumulated in the past, and our bank's asset quality is improving significantly," Zhou added.

Bank of China, picked by the central government as a pilot for the country's banking reform, received a US$22.5 billion capital injection from the State in late 2003.

Last August, it reorganized itself into a joint-stock company named Bank of China Limited.

Spokesman Wang Zhaowen said Bank of China has entered the second stage of the reform, which focuses on improving the bank's corporate governance.

"We give top priority to improvement of our financial strength rather than an initial public offering (IPO) - which will be the last step of reform," he said.

Bank of China reported business income of 104.7 billion yuan (US$12.6 billion) last year, up 22.2 per cent from a year previously.

It's total assets reached 4.27 trillion yuan (US$514.5 billion) at the end of last year, an increase of 7.3 per cent from the end of 2003.

According to Wang the bank will finish preparations for the IPO before the end of this year.

After that it will be a case of waiting for the right time before the bank is listed, he said.

Wang insisted talks with potential strategic company investors are going smoothly.

"Progress is being made," he said, but stressed it was too early to announce the names of the investors.

Strategic investors will help increase the bank's capital strength, optimize capital structure and diversify ownership, he added.

A senior researcher with the State Council Development Research Centre, Wang Zhao said domestic banks will have to increase their competitiveness, as foreign companies will soon enter the market without restrictions.

"They will have to improve their internal control mechanisms and corporate governance, while keeping clean balance sheets," he said.

In April, Bank of China disclosed its unaudited pre-tax profit for the first quarter of the year, unveiling a year-on-year rise of 45.8 per cent to 19.2 billion yuan (US$2.3 billion).

The bank's non-performing credit dropped 0.42 percentage point.

Wang Zhaowen said the bank is in promising shape, suggesting the on-going reform is having a positive impact on the bank's development.

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